You cannot implement a problem – only a solution

Wednesday 2 June 2010, 7:20AM
By Federated Farmers of New Zealand

Conor English, Federated Farmers Chief Executive Officer.

Everyday, Federated Farmers is interested in solutions, focused on farmer viability and our ability to farm for generations. We lobby at international, national, regional and sectoral level. We focus on strategic issues such as trade access; monetary and fiscal policy; regional government; infrastructure ownership (roads and broadband); water (its allocation, its management, its quality and its storage); farmer succession; bio-security; animal welfare; human capability; research; the cost and availability of capital, among other things.

It’s not enough just to identify problems. That is only the first step as we navigate towards successful solutions for farmers and our rural communities. I have yet to see anyone successfully implement a problem! So how are we tracking on some of this stuff?:

Emissions Trading Scheme: It’s true we didn’t stop the ETS being implemented. It was hard when our last Prime Minister gave $1 billion each to two small parties for their pet policies to get their vote. Now with only five votes in Parliament for a repeal of Labour’s ETS law, we have focused on solutions, which, according to the current Prime Minister, will see the average cost for farmers reduce from $30,000 to $3000 per year. That’s a 90 percent reduction. ETS numbers are tricky, but this is a very significant and real reduction.

By lobbying for alignment with Australia, a reduction in the abatement rate of the free carbon credits from 8 percent to 1.3 percent per year, a carbon price cap of $25 and recognition of carbon intensity as a measure, the impact of the legislation was substantially reduced. With reviews due in 2011 and 2014, we have the opportunity to reflect any international developments. We have strongly supported increased international research efforts to seek new ways of reducing emissions, while improving productivity on farm.

This isn’t the perfect solution, which is no ETS, but a 90 percent reduction in cost and two reviews before full implementation, is a pretty good second choice solution given the political and economic realities.

Cost and availability of capital: Every one percent interest rate on rural debt is worth $500 million cash to farmers. That’s about the same as our annual wool clip receipts. We mounted a campaign against the banks on their margins and cost of money. This saw us build pressure in a number of ways, a Parliamentary inquiry into banking and as a result the banks have been more reasonable with pricing in 2010 than they otherwise would have. That saved farmers substantial amounts of money.

We have worked with the Reserve Bank to ensure that the speed of implementation has been slowed down on their new “prudential measures” and capital asset ratio requirements of banks. While there has definitely been a tightening on availability of capital, the implementation of these new policies will now be at a far slower pace than originally planned, thus reducing even more stress among the farming community. We argued that speed on implementation was not the solution New Zealand needed.

Rural Broadband and applications: Instead of hammering on about the problems of the Government’s broadband policy, which we believe could have been much better, we have worked with the Government on a better solution for rural New Zealand. This has seen the amount of money to be invested rise from just $48 million to $300 million. We are still working on how we can leverage the other $1.5 billion available for the other 75 percent of the population.

However, any such infrastructure is only helpful if you can do something useful with it. So we held the first “Federated Farmers Solution Series” on “Farming in the Cloud – Rural Online Solutions“, with Rod Drury of Xero. This was a low key one day session in Wellington with 15 leading presenters and 50 selected people in the room. We are now working on the conclusions and outcomes from that day so that our rural communities can enjoy the solutions broadband and the applications available with it bring.

Exchange rates and monetary policy: Our second solution session was on the exchange rate and associated policies. Farmers, as exporters, don’t like its volatility or level. We again gathered some 50 people and leading speakers including Dr Alan Bollard (Reserve Bank Governor), Hon Bill English (Minister of Finance), Hon David Cunliffe (Opposition finance spokesperson), Dominic Stephens (Westpac), Ganesh Nana (BERL), Murray Sherwin (MAF Director General), Roger Kerr (Asia-Pacific Risk Management) and Rob Davison (Meat & Wool NZ). While this was a chatham house rules session with invited attendees, there were a number of themes that came through, too many to mention in this short column!

However the important point is that the day was focussed on solutions and not simply the problems.

Of course there are many more solutions we are seeking. On water we are seeking solutions to complex issues. However the changes at ECan, more and earlier local consultation and collaboration with regional councils, our work on the Land and Water Forum and our lobbying in various ways on all aspects of water – ownership, allocation, management, quality and storage, are making progress. To find out more about what we are getting up to go to www.fedfarm.org.nz.